“The prospects for gas markets remain dim, not least because of Russia’s reckless and unpredictable behavior. But all indications are that the market will continue to experience deficits for much of 2023,” the International Energy Agency (IEA) describes the situation in its quarterly report on the global gas market.
In Europe, demand will fall by a record 10% this year, then another 4% next year, the IEA expects. Its reduction is most noticeable in the industrial sector (by 15% in January-August compared to the same period in 2021), but the effect of high prices is beginning to affect electricity generation as well.
As a result, aggregate global demand will fall by 0.8% this year and could rise by only 0.4% next year, but the outlook is highly uncertain, “especially with regard to Russia’s future actions and the economic consequences of persistently high commodity prices. gas,” the IEA notes.
The cessation of Russian pipeline gas deliveries to Europe created tension in the entire world market, as the regions had to actively compete for supplies, primarily of liquefied natural gas, the agency states. According to his forecast, this year LNG imports to Europe will increase by more than 60 billion cubic meters compared to 2021. In January-August, European demand for LNG has already jumped by 65%.
“Savings measures are urgently needed to minimize gas withdrawal from storage facilities and keep them at an adequate level until the end of the heating season,” the IEA urges.
According to his analysis, if Russia completely stops deliveries to the EU from November 1, less than 20% of LNG imports may remain in storage in February with significant imports of LNG, and only 5% with insignificant ones. This low stock level can lead to disruptions if the winter ends too cold.
EU countries have previously agreed to voluntarily reduce consumption by 15% by the end of the heating season compared to the five-year average. And on Friday, energy ministers agreed a measure on its obligatory reduction by 5% during peak load hours. If Europe can save 13% compared to the five-year level, then even with insignificant LNG supplies, more than 33% will remain in storage, the IEA expects.
Gas storage facilities are now 88.07% full, with 10 countries exceeding 90%, according to Gas Infrastructure Europe.
The wholesale price of gas in Europe, which soared to 340 euros/MWh at the end of August, fell below 180 euros ($1,852 per 1,000 cubic meters) at auction on Monday.